Standard Life Aberdeen is replacing chief executive Keith Skeoch with former Citigroup banker Stephen Bird as the UK’s largest asset manager seeks a fresh start after its much-maligned merger three years ago.
In an abrupt shake-up of SLA’s top ranks Mr Bird will take over as chief executive designate on Wednesday, the company said. Mr Skeoch, one of the architects of the £11bn combination of Standard Life and Aberdeen Asset Management in 2017, will step down from the board by the end of the third quarter following a handover period.
Chris Turner, an analyst at Berenberg, said the leadership revamp “was not expected by investors” and was likely to signal “larger changes to the group’s dividend policy, strategic direction and appetite for M&A”. Shares in the company rose 2.5 per cent on Tuesday.
The replacement of Mr Skeoch, which was instigated by SLA chairman Douglas Flint, comes as the fund group that holds £490bn in assets attempts to move on from the problems that have dogged it since its merger. Heavy outflows and weak performance have resulted in a fall in SLA’s market capitalisation from £15bn at its peak to £6.1bn.
Sir Douglas said the change signalled “the beginning of a new chapter” and drew a line under the transition overseen by Mr Skeoch.
One person close to the situation described Mr Bird as “a completely new broom with no tribal alliances to SLA’s heritage brands”. A newcomer to fund management, the new chief executive had been in the running to take the helm at HSBC before the bank appointed Noel Quinn as chief this year. He spent 21 years with Citi, most recently as head of global consumer banking, until he stepped down last year.
SLA appointed executive search firm MWM Consulting to find a successor to Mr Skeoch at the start of 2020.
Mr Skeoch, who led Standard Life for two years before the merger, initially served as co-chief executive of the combined company alongside Aberdeen’s Martin Gilbert. This cumbersome co-leadership structure was unpopular with shareholders and was scrapped last year, with Mr Skeoch assuming sole leadership of the company.
Sir Douglas said that now Mr Skeoch had achieved several key milestones, such as completing the bulk of the integration process and strengthening SLA’s balance sheet through selling down stakes in non-core businesses, the time was right for him to hand over.
He added that the coronavirus crisis had added impetus to the board’s decision to appoint a successor. “We agreed that in the post-Covid world there will be a great deal to think about” and that the company would be best placed to face this “with [the question of] leadership succession settled”, he said.
Berenberg’s Mr Turner said the leadership change increased the likelihood of SLA cutting its dividend. The company pledged to maintain its 21.6p dividend this year but Berenberg believed this unsustainable and assumed a 50 per cent cut to the group’s payout next year.
The appointment of Mr Bird may also herald a return to large-scale mergers and acquisitions for SLA, Mr Turner added. He noted that, with Mr Skeoch stepping down from the board, all the group’s senior positions would be held by individuals who were not associated with the merger. “We believe this makes it easier for SLA to undertake substantial M&A transactions again,” he said.
Sir Douglas pointed to Mr Bird’s experience in “[creating] valuable partnerships and [guiding] businesses through periods of major change”, and his familiarity with Asian markets. The executive, who will be paid £875,000 a year and will have the opportunity to pocket an annual bonus of up to 250 per cent of salary, served as Citi’s Asia-Pacific head for four years.
Amin Rajan, chief executive of consultancy Create-Research, said the appointment indicated “a pivot towards two key future growth engines in global asset management, retail clients and Asia”.
Additional reporting by Chris Flood